CEO David Cordani has reassured investors that the troubled deal with Anthem is good for Cigna while touting its prospects as an independent company, putting him in a precarious position, according to Bloomberg.
That Cordani met with investors this late in the deal process signals that he is skeptical about deal going through, one investor says. “Why would you take the time and expense to meet with investors if you thought that in the short term there was going to be a transaction?” Les Funtleyder, of E Squared Asset Management, notes in an interview with Bloomberg.
The Justice Department's antitrust suits against the Anthem-Cigna and Aetna-Humana deals will be tried separately, with Obama appointee Judge Amy Berman Jackson presiding over the Anthem-Cigna trial. Judge John Bates will hear the case against the Aetna-Humana deal.
If the deal with Anthem falls through, Cigna will haul in a $1.85 billion break-up fee, Bloomberg notes. The company has approximately $2.45 billion cash on hand as of Q2.
Goldman Sachs analysts note that if Cigna decides to raise more capital, it could have approximately $10 billion in cash for takeovers or stock repurchases, the article adds.
In Cigna's quarterly earnings call, Cordani made clear that the company is dedicated to fulfilling its contractual obligations with Anthem to fight for the merger, but maintains an “ongoing evaluation and monitoring of all options as they unfold.”
He also said company’s priorities are to support existing business lines and "further create shareholder value with the tremendous capital flexibility we have created over the last several years." Indeed, if the mega-mergers flop, health insurers are likely to pivot toward smaller acquisitions.
- read the Bloomberg article